How to Obtain Government Grants for Small Businesses

For most small business owners, the traditional avenues of financing include venture capitalists, angel investors, friends and family, and bank loans. One often overlooked method of financing is the government grant, which is usually provided for non-profit organizations. However, there have been instances when a for-profit business has been able to acquire a government grant. Some websites claim that acquiring a government grant is easy, resembling a get rich quick scheme you're likely to see on a late night infomercial. Quite the contrary - it's not, and requires an extraordinary amount of research and luck. Here are the steps you can follow to give it a try.

Where to Look and What to Avoid

First and foremost, avoid any websites that pop up on Google claiming that they can teach you "How to Get Grants". These are all simple rewrites of information freely available on the Catalog of Federal Domestic Assistance and Grants.gov. These websites have limited business categories in which they provide grants. However, contrary to popular belief, the U.S. Small Business Administration does not. Rather, the SBA offers loan programs for small businesses. The only grants it offers are for businesses which provide "business management", "technical assistance" or "financial assistance" to existing companies.

Narrow Niche Requirements

Be aware that most government grants are extremely specific with their requirements. An example requirement could read: "for minority business owners involved in transportation related contracts emanating from DOT - Disadvantaged Business Enterprises Short Term Lending Program". If you fail to meet any part of that requirement, then you're simply not eligible. However, due to a "life event" - for example, the death of a spouse - you could be eligible for government benefits, which could be in turn used to fund a small business. For more information, visit the government benefits portal. You may also have better luck with obtaining private grants - some small business owners have obtained grants from the Foundation Center's Foundation Grants for Individuals Online, a subscription based database for "students, artists, academic researches, libraries and financial aid offices" to obtain funding. However, entrepreneurs are not listed, but your business might be able to find a benefactor if your business piques their interest.

Is it Worth the Effort?

In short, obtaining government funding for your small business is extremely hard unless you happen to perfectly fit a narrow niche. After all, it wouldn't make good sense if the government started funding private ventures - which is practically gambling - with taxpayer money. It's due to this stigma that the government will only fund businesses which are deemed productive to a community, and sharing some similar characteristics with non-profit organizations.

In most cases, you'll be better off obtaining funding from the aforementioned "normal avenues" of financing, rather than spending time searching for government financing for your small business - especially in these turbulent economic times.